GOLDMAN: The S&P 500 Will Hit Another All-Time High Before Year-End

Goldman Sachs thinks US stocks will hit all-time highs again this
year.

In a note to clients over the weekend, Goldman Sachs equity chief
David Kostin writes that the S&P 500 will hit 2,050 by the
end of this year, and will rise 10% to hit 2,150 within a year.

On Friday, the S&P 500 closed at 1,964, and the S&P
hasn't hit an all-time high since Thursday, September 18, the day
before the Alibaba IPO.

Kostin writes that, "As investors recognize the
durability of US growth despite faltering global activity, we
expect S&P 500 will climb to 2050 by year-end and rise by 10%
to 2150 in 12 months."

So this call
comes for higher stock prices comes despite expectations that
earnings estimates will continue to be revised downward, with
earnings expectations for 2015 falling 2% since
mid-September.

Goldman Sachs

Corporate
earnings will likely be dented by falling oil prices, but Kostin
writes that analysts and investors seem focused only on the
negative effects of lower oil prices while neglecting the
beneficiaries. But Kostin says the the fall
in oil prices is a net positive for the US economy, specifically
consumers.

And while
investors may still be thinking about the decline in stocks
earlier this month, Kostin writes that, "through the rear-view
mirror, the recent sell-off looks remarkably like just another
average pullback."

And so
overall, Goldman expects that as the market digests the recent
moves in the stock market and oil prices, the S&P 500 will
resume its multi-year run higher.

Back in early
August,
we highlighted one of Kostin's big calls on overall
positioning, specifically that a "big divergence" was coming to
US stocks and bonds.

Year-to-date,
that strategy of buying stocks and selling US 10-year Treasury
bonds is down 1.7%.